Oil marketing firms report R25K crore loss on subsidised fuel

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SummaryThe finance ministry has agreed to disburse Rs 8,000 crore as cash subsidy to Indial Oil Corp (IOC), BPCL and HPCL.

The oil marketing companies have reported Rs 25,579 crore as under-recoveries during first three months of the current financial year on diesel, kerosene and domestic LPG but on the brighter side it is running less than the corresponding level of the last financial year.

The finance ministry has agreed to disburse Rs 8,000 crore as cash subsidy to Indial Oil Corp (IOC), BPCL and HPCL to make up for the losses, which is short of Rs 11,451 crore sought by the petroleum ministry for the April-June quarter of 2013-14.

IOC will get cash subsidy of Rs 4,261.29 crore, BPCL Rs 1,916.57 crore and HPCL Rs 1,822.14 crore for the first quarter. Upstream oil firms like ONGC, Oil India Ltd (OIL) and gas supplier GAIL India will bear Rs 15,303.84 crore and the rest would be borne by fuel retailers.

But already in the second quarter the daily under-recovery of the companies have risen to Rs 470 crore on the sale of high speed diesel, kerosene and domestic LPG in September. It was Rs 389 crore in the previous fortnight from August 16.

The under-recovery on diesel from the first fortnight from September 1 has increased to Rs 12.12 per litre against Rs 10.22 during the second fortnight of August.

For kerosene and domestic LPG, under-recoveries for September increased further to Rs 36.83 per litre and Rs 470.38 a cylinder respectively against Rs 33.54 per litre and Rs 412 per cylinder last month.

Of the reported Rs 25,579 crore in under-recoveries during the first quarter of 2013-14, Rs 10,554 crore has been on diesel, Rs 6,507 crore on kerosene and Rs 8,518 crore on LPG.

The under-recovery of these petroleum products have been Rs 1,61,029 crore in 2012-13, Rs 1,38,541 crore in 2011-12 and Rs 78,190 crore 2010-11. The domestic basket of crude oil price per barrel as on the last trading day of August 30 stood at Rs 7,501.11 a barrel as compared to Rs 7723.68 a day before at the exchange rate of Rs.66.57 to a US dollar.

Subsidy Burden

* The finance ministry has agreed to disburse R8,000 crore as cash subsidy to the three oil marketing companies for the first quarter

* Under-recovery on diesel has increased to R12.12 a litre from R10.22 in the second half of August

* Of the total under-recoveries, diesel accounts for the most

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